Apple, Microsoft poised to wake ‘comfortably numb’ markets

After that tandem of 1% moves last week, the market’s in a flummoxed state. Just as strong earnings and an amenable Fed draw investors in, flare-ups abroad push them back out. So here we sit. Torn.

In the absence of any supernatural notion of where this market is headed, this object in motion will probably stay in motion. And that motion is to just keep moving higher, laying waste to whatever gets in the way. There is, indeed, a sell-by date on this thing, but it’ll probably have to wait until after earnings season.

Today, tech heavies Apple and Microsoft will give investors an indication of how this will pan out in the next few weeks. The tech old guard has been on a spectacular run this year, and many are closing in, and even passing, 1999 levels.

This move started to take shape when sketchier momentum names took their tumble earlier in the year. Now, though, it’s feeling a bit stretched as small caps drift away from the large. There’s a trade in there, somewhere (see our call of the day).

For now, if the current trends hold and earnings expectations are on point, the market should be able to once again look past the next batch of bad news from Ukraine or Gaza or whatever else attempts to lay a dead hand on this rally.

The quote of the day: “Looking at ‘value’ is a lot like looking at ‘beauty’. You might think you know what beauty is, but if the market is a Keynesian beauty contest where you’re trying to judge the beauty of contestants relative to the way the other judges perceive beauty, then the only thing that matters is what the other judges believe.” — Cullen Roche, of the Pragmatic Capitalism blog.

Netflix
/quotes/zigman/87598/delayed/quotes/nls/nflxNFLX shares are up just a bit early, with investors showing at least some hesitation after the company late yesterday said its second-quarter earnings more than doubled. Better-than-expected subscriber numbers were a driving force. We’ll have to wait and see how that one-dollar price hike works out for them.

The economy: Clearly, earnings are the straw that stirs today’s drink, but there’s plenty of economic data to sip on, as well, starting with the consumer price index. Prices rose 0.3% in June, led by gasoline. Later comes the FHFA house-price index. At 10:00 a.m. Eastern, the star of the show arrives in the form of existing-home sales for June. The Richmond Fed survey of manufacturing activity hits at the same time.

The buzz: Tuesday deal news is getting to be a regular thing. CIT Group
/quotes/zigman/579893/delayed/quotes/nls/citCIT is buying the parent company of OneWest Bank for $3.4 billion in cash and stock. CIT also posted a sharp profit rise, beating forecasts.

Have you been waiting for your chance to take a crack at the Saudi stock market? You’ll soon have your chance, according to Bloomberg. That should please Mark Mobius, the influential executive chairman of Templeton Emerging Markets Group, who said late last year his firm could double or triple its investment in the country if authorities allowed direct foreign access.

It’s not just about Apple’s earnings today. The company is also preparing for its largest initial production run (80 million units) of the big-screen iPhones, betting that the new models will help draw consumers away from the likes of Samsung.

The chart of the day:If any company should be feeling some heat from what’s happening across the pond, it’s J.P. Morgan
/quotes/zigman/272085/delayed/quotes/nls/jpmJPM, says Greg Harmon of Dragonfly Capital. But no, it’s holding steady, even after a huge post-earnings surge. What’s more, it’s showing us a bull flag that could give this stock a technical pop-up to $62 a share. “Time to put this bank on your trading agenda,” he wrote.

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